1
00:00:02,640 --> 00:00:05,320
Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you.

2
00:00:05,360 --> 00:00:07,760
Speaker 1: Along with my co host Lisa Brahmas. Each day we

3
00:00:07,880 --> 00:00:10,440
Speaker 1: bring you the most noteworthy and useful interviews for you

4
00:00:10,520 --> 00:00:12,640
Speaker 1: and your money. Whether at the grocery store or the

5
00:00:12,640 --> 00:00:15,960
Speaker 1: trading floor. Find a Bloomberg Penl podcast on Apple podcast

6
00:00:16,120 --> 00:00:18,000
Speaker 1: or wherever you listen to podcasts, as well as that

7
00:00:18,040 --> 00:00:22,040
Speaker 1: Bloomberg dot com. Well, it doesn't look like we are

8
00:00:22,120 --> 00:00:25,720
Speaker 1: getting something from Apple when it comes to satellites and

9
00:00:25,880 --> 00:00:30,200
Speaker 1: the infrastructure that they're creating in order to have faster, better,

10
00:00:30,400 --> 00:00:34,400
Speaker 1: more reliable access. Uh sure. Overd is here shrug in

11
00:00:34,440 --> 00:00:38,320
Speaker 1: her shoulders, making some interesting faces. She's a she's a

12
00:00:38,320 --> 00:00:43,239
Speaker 1: calmness covering tech. This is radio. Actually not think it is.

13
00:00:43,440 --> 00:00:46,560
Speaker 1: Honestly like these are These are fantastic expressions and sort

14
00:00:46,600 --> 00:00:49,040
Speaker 1: of say everything that you need to say. You're dubious. Okay,

15
00:00:49,080 --> 00:00:51,960
Speaker 1: just hold on a second. Just just buy your shrug

16
00:00:52,240 --> 00:00:55,480
Speaker 1: and the face that you just made. Bloomberg opinion columnist

17
00:00:55,480 --> 00:00:57,920
Speaker 1: Shia Overday. My guess is at your take on this

18
00:00:58,840 --> 00:01:02,320
Speaker 1: is that it's a and this guy kind of investment

19
00:01:02,880 --> 00:01:05,880
Speaker 1: that is something that they can do with their oodles

20
00:01:06,000 --> 00:01:10,840
Speaker 1: of cash. And that seems feasible. Uh maybe, yeah, So

21
00:01:11,200 --> 00:01:13,720
Speaker 1: I think that my reason for the shrugging is that

22
00:01:13,959 --> 00:01:17,240
Speaker 1: there are a lot of companies working on UM what

23
00:01:17,319 --> 00:01:22,000
Speaker 1: are called kind of low Earth orbit satellites UM that

24
00:01:22,040 --> 00:01:26,520
Speaker 1: are in theory will be used to provide better or

25
00:01:27,280 --> 00:01:31,679
Speaker 1: more available mobile internet service. So, you know, Jeff Bezos,

26
00:01:31,800 --> 00:01:35,160
Speaker 1: both Amazon and his Blue Origin Space company are working

27
00:01:35,160 --> 00:01:38,280
Speaker 1: on a project. So it's SpaceX, the Elon Musk company.

28
00:01:38,360 --> 00:01:41,880
Speaker 1: There's a number of smaller startups like one Web that

29
00:01:41,920 --> 00:01:46,240
Speaker 1: are also working on these projects. And the idea seems cool, right.

30
00:01:46,280 --> 00:01:50,120
Speaker 1: It's that right now, providing mobile internet it requires a

31
00:01:50,160 --> 00:01:52,520
Speaker 1: lot of physical infrastructure on the ground, right you have

32
00:01:52,560 --> 00:01:55,560
Speaker 1: cell phone towers and all these base stations, and as

33
00:01:55,600 --> 00:01:57,640
Speaker 1: we move into a five G world, there's going to

34
00:01:57,720 --> 00:02:01,440
Speaker 1: be even more of these nests sary UM to kind

35
00:02:01,440 --> 00:02:06,080
Speaker 1: of provide efficient and reliable mobile internet. And so the

36
00:02:06,120 --> 00:02:08,800
Speaker 1: idea is that we can fire a whole bunch of

37
00:02:08,840 --> 00:02:13,840
Speaker 1: satellites into space that may be a more effective solution

38
00:02:14,000 --> 00:02:17,160
Speaker 1: to provide mobile internet, particularly in places that are rural

39
00:02:17,320 --> 00:02:21,520
Speaker 1: or remote, either in the developing world or in places

40
00:02:21,600 --> 00:02:24,639
Speaker 1: like the Arctic or Alaska or rural Iowa or whatever.

41
00:02:25,040 --> 00:02:27,840
Speaker 1: But it's gonna be it's gonna be very expensive, and

42
00:02:27,880 --> 00:02:30,000
Speaker 1: it's gonna take a very long time, and there's legitimate

43
00:02:30,040 --> 00:02:33,320
Speaker 1: questions about whether any of this stuff is technologically feasible.

44
00:02:33,480 --> 00:02:35,800
Speaker 1: It's interesting, and we also saw today with the Boeing

45
00:02:36,080 --> 00:02:38,640
Speaker 1: launch and then the failure to reach the space station.

46
00:02:39,040 --> 00:02:42,040
Speaker 1: The satellite business is a tough business. Uh. There's a

47
00:02:42,040 --> 00:02:44,400
Speaker 1: lot of failed satellite companies out there, and there's a

48
00:02:44,400 --> 00:02:45,960
Speaker 1: lot of bond holders out are holding on the paper

49
00:02:46,000 --> 00:02:50,440
Speaker 1: and they're really concerned. There's spaces literally littered with failed

50
00:02:50,480 --> 00:02:54,160
Speaker 1: satellites up there. If your Apple is I guess the

51
00:02:54,240 --> 00:02:56,320
Speaker 1: question a lot investors have is because I think the

52
00:02:56,360 --> 00:02:58,480
Speaker 1: surprise a lot of investors is is it better to

53
00:02:58,560 --> 00:03:00,760
Speaker 1: kind of do it yourself or just kind of outsourced.

54
00:03:00,800 --> 00:03:02,919
Speaker 1: I guess yeah, it's a very good point, and you're

55
00:03:02,960 --> 00:03:05,720
Speaker 1: right there. There are a lot of failed satellite companies

56
00:03:05,760 --> 00:03:08,919
Speaker 1: out there, including satellite broadband companies. So we'll see how

57
00:03:08,919 --> 00:03:12,720
Speaker 1: this progresses. On the other hand, look, we do want companies,

58
00:03:12,760 --> 00:03:16,120
Speaker 1: particularly companies like Apple that throw off lots of cash

59
00:03:16,360 --> 00:03:20,760
Speaker 1: to invest in put in promising future projects. And we

60
00:03:20,800 --> 00:03:23,560
Speaker 1: talked about earlier with Amazon. Right, we've seen the investments

61
00:03:23,639 --> 00:03:26,800
Speaker 1: they've made in their infrastructure with things like warehouses and

62
00:03:26,840 --> 00:03:30,280
Speaker 1: their delivery operation that that has really paid dividends in

63
00:03:30,360 --> 00:03:34,440
Speaker 1: transforming the company and getting packages to people's homes faster.

64
00:03:34,840 --> 00:03:37,640
Speaker 1: I have a crazy idea, and we were talking about

65
00:03:37,640 --> 00:03:41,880
Speaker 1: this John Butler of Bloomery Intelligence earlier. Why does an

66
00:03:41,920 --> 00:03:45,160
Speaker 1: Apple with its crazy billads of cash just by a

67
00:03:45,240 --> 00:03:50,160
Speaker 1: T and T by Verizon? Okay, I mean it's a look,

68
00:03:50,280 --> 00:03:54,240
Speaker 1: it's a totally it's a totally fair question. And look,

69
00:03:54,360 --> 00:03:57,240
Speaker 1: we did see we have seen circumstances in the past

70
00:03:57,320 --> 00:04:01,040
Speaker 1: where Google they did not buy one of the telecom companies,

71
00:04:01,040 --> 00:04:06,040
Speaker 1: but they did have their own um Internet and cable

72
00:04:06,120 --> 00:04:10,160
Speaker 1: television company, which they have significantly scaled back because they

73
00:04:10,200 --> 00:04:13,960
Speaker 1: felt that they couldn't really make it work on a

74
00:04:14,080 --> 00:04:16,279
Speaker 1: large scale the way that you know, the sort of

75
00:04:16,320 --> 00:04:18,679
Speaker 1: comcasts and A T and T s of the world

76
00:04:18,720 --> 00:04:20,720
Speaker 1: make it work. It'since I'm looking at the A T

77
00:04:20,800 --> 00:04:23,240
Speaker 1: and T. I'm sorry. The Apple shares fifty two week

78
00:04:23,320 --> 00:04:26,599
Speaker 1: high today, uh stocks up seventy percent year to date,

79
00:04:26,880 --> 00:04:30,680
Speaker 1: market cap of one and a quarter trillion dollars share.

80
00:04:30,720 --> 00:04:36,080
Speaker 1: It just seems like whatever they're doing, shareholders just love it.

81
00:04:36,120 --> 00:04:37,920
Speaker 1: So I guess the big issue for this company has

82
00:04:37,920 --> 00:04:41,279
Speaker 1: been can it pivot from a phone only company, hence

83
00:04:41,320 --> 00:04:43,880
Speaker 1: it only company, to a more of a diversified services company.

84
00:04:44,040 --> 00:04:46,080
Speaker 1: Looks like the market saying yes, I think that's right,

85
00:04:46,120 --> 00:04:48,360
Speaker 1: and the market is saying yes, I certainly have doubts

86
00:04:48,360 --> 00:04:52,200
Speaker 1: about whether that transformation is real. Um it is. It

87
00:04:52,320 --> 00:04:55,200
Speaker 1: is very interesting to look at what Apple is spending

88
00:04:55,240 --> 00:04:58,800
Speaker 1: money on. So this is a company that has, as

89
00:04:58,839 --> 00:05:02,200
Speaker 1: a share of revenue, tripled their expenditure on research and

90
00:05:02,240 --> 00:05:06,200
Speaker 1: development the last five years. That Apple, for a tech company,

91
00:05:06,279 --> 00:05:08,800
Speaker 1: is still spending a relatively small share of their revenue,

92
00:05:08,800 --> 00:05:12,280
Speaker 1: about six percent of their revenue on research and development projects.

93
00:05:12,279 --> 00:05:15,080
Speaker 1: So that's everything from the stuff that is going into

94
00:05:15,080 --> 00:05:18,520
Speaker 1: phones right now to these kind of future satellite projects

95
00:05:18,600 --> 00:05:22,640
Speaker 1: and augmented reality glasses and driverless cars and whatever comes next.

96
00:05:23,000 --> 00:05:25,800
Speaker 1: So I think investors have been very willing to be

97
00:05:25,880 --> 00:05:29,479
Speaker 1: patient on seeing some of those longer term projects payoff.

98
00:05:29,960 --> 00:05:33,440
Speaker 1: It is right now affecting Apple's profit that you see

99
00:05:33,720 --> 00:05:37,640
Speaker 1: the profit margin at Apple has gone. The operating profit

100
00:05:37,680 --> 00:05:40,960
Speaker 1: margin used to be five years ago and now it's

101
00:05:41,000 --> 00:05:43,520
Speaker 1: twenty four percent. It's at the lowest level. It's been

102
00:05:43,560 --> 00:05:46,320
Speaker 1: in a decade and one big reason for that is

103
00:05:46,360 --> 00:05:51,479
Speaker 1: this heavy spending on research and development. Yeah, I know exactly.

104
00:05:51,600 --> 00:05:56,000
Speaker 1: It's fair enough. It is still a massively profitable company.

105
00:05:56,240 --> 00:05:57,960
Speaker 1: Thanks so much for joining a shore of a Bloomer

106
00:05:58,000 --> 00:06:00,640
Speaker 1: Opinion technology commas. You can read all of her work

107
00:06:00,680 --> 00:06:02,839
Speaker 1: and all the other great work done by our folks

108
00:06:02,839 --> 00:06:05,520
Speaker 1: at Bloomberg Opinion, at Bloomberg dot com, slash opinion or

109
00:06:05,640 --> 00:06:09,360
Speaker 1: on the terminal op I n go. They do fantastic work.

110
00:06:09,360 --> 00:06:11,720
Speaker 1: Really give me, I think, unique views into a lot

111
00:06:11,760 --> 00:06:13,320
Speaker 1: of industries, a lot of companies, a lot of the

112
00:06:13,320 --> 00:06:16,040
Speaker 1: news items going on UH, and they're really well informed.

113
00:06:16,080 --> 00:06:18,160
Speaker 1: And I heard you to read that Bloomberg Opinion work.

114
00:06:18,200 --> 00:06:36,599
Speaker 1: Outstanding stuff on the terminal end on the website. Well,

115
00:06:36,720 --> 00:06:39,880
Speaker 1: a year ago today, where were we A year ago today?

116
00:06:40,000 --> 00:06:43,800
Speaker 1: We were down, you know, close to the markets. Were

117
00:06:43,839 --> 00:06:46,640
Speaker 1: doing that. You're doing exactly what Tom Kane does exact

118
00:06:46,800 --> 00:06:48,760
Speaker 1: day because he's not here, so you're you know, so

119
00:06:48,839 --> 00:06:50,800
Speaker 1: I am doing it. What a difference of year makes

120
00:06:50,839 --> 00:06:53,320
Speaker 1: a year ago? Our next guest kim In Peter Kenny,

121
00:06:53,360 --> 00:06:56,120
Speaker 1: founder of the Strategic Board Solutions UH and Kenny, a

122
00:06:56,240 --> 00:06:59,760
Speaker 1: company he was in this studio a year ago, saying

123
00:07:00,360 --> 00:07:04,240
Speaker 1: things aren't so bad. Let's get constructive. Peter Kenny, thanks

124
00:07:04,240 --> 00:07:07,000
Speaker 1: so much for joining us. Where do you stand now?

125
00:07:07,120 --> 00:07:10,160
Speaker 1: You boy? You a you were super right? Thank you?

126
00:07:10,880 --> 00:07:13,440
Speaker 1: What do we do now? Do you think? You know?

127
00:07:13,880 --> 00:07:16,240
Speaker 1: It's been a great year. I kind of expected this

128
00:07:16,840 --> 00:07:19,400
Speaker 1: pretty much more or less to the point on the

129
00:07:19,520 --> 00:07:22,400
Speaker 1: SMP five. I'm still very constructive, believe it or not,

130
00:07:22,520 --> 00:07:24,080
Speaker 1: in spite of the fact that we've just seen a

131
00:07:24,920 --> 00:07:29,520
Speaker 1: gain for the SMP five this year. I'm still constructive,

132
00:07:29,600 --> 00:07:33,280
Speaker 1: but much more modestly so. So instead of the tent

133
00:07:33,360 --> 00:07:35,480
Speaker 1: that we saw this year, I'm looking at maybe between

134
00:07:35,560 --> 00:07:37,960
Speaker 1: six and nine percent next year. May get us to

135
00:07:38,800 --> 00:07:41,280
Speaker 1: by the end of the year. The reason why I'm

136
00:07:41,320 --> 00:07:43,160
Speaker 1: still constructive in spite of the fact that we've seen

137
00:07:43,200 --> 00:07:46,360
Speaker 1: a gain is because we have very low interest rates,

138
00:07:46,800 --> 00:07:50,720
Speaker 1: great economic data, clear signs of re engagement in terms

139
00:07:50,720 --> 00:07:54,040
Speaker 1: of growth in the U. S. Economy, great news and

140
00:07:54,160 --> 00:07:59,000
Speaker 1: the trade front, and consumer sentiment, income employment. This stuff

141
00:07:59,080 --> 00:08:02,280
Speaker 1: is just super strong, and I think that we're going

142
00:08:02,320 --> 00:08:05,040
Speaker 1: to continue to see that. You know, the tide lift

143
00:08:05,240 --> 00:08:07,680
Speaker 1: all right, Peter, there's a difference between six or nine

144
00:08:07,720 --> 00:08:12,720
Speaker 1: percent returns that steadily get developed over the year. That

145
00:08:12,840 --> 00:08:14,560
Speaker 1: seems to be different than what people think is going

146
00:08:14,600 --> 00:08:16,160
Speaker 1: to happen, where it's going to be front load in

147
00:08:16,160 --> 00:08:17,920
Speaker 1: the front half of the year and the back half

148
00:08:18,000 --> 00:08:21,520
Speaker 1: is going to be kind of rough based on political uncertainty.

149
00:08:21,600 --> 00:08:24,800
Speaker 1: Would you agree with that assessment? Absolutely? Okay, yes, So

150
00:08:24,840 --> 00:08:26,720
Speaker 1: in the first half of the year, what kind of

151
00:08:26,720 --> 00:08:30,200
Speaker 1: returns can people expect? I think first, by the end

152
00:08:30,200 --> 00:08:31,840
Speaker 1: of the second quarter, I think you're gonna look at

153
00:08:31,840 --> 00:08:35,400
Speaker 1: maybe seven to nine. But it is definitely going to

154
00:08:35,440 --> 00:08:38,840
Speaker 1: be much more choppy than we saw this year, even

155
00:08:38,880 --> 00:08:40,880
Speaker 1: in the first half, even in the first half, and

156
00:08:40,920 --> 00:08:43,400
Speaker 1: I would suggest that the volatility that we see peak

157
00:08:44,120 --> 00:08:47,800
Speaker 1: next year will be in the first half. Really why well,

158
00:08:47,840 --> 00:08:50,479
Speaker 1: a couple of things. First of all, the cbo EUM

159
00:08:50,760 --> 00:08:55,480
Speaker 1: options are suggesting that there's complacency in the market, and

160
00:08:55,559 --> 00:08:57,760
Speaker 1: pretty much everything else is suggesting that as well. And

161
00:08:57,800 --> 00:08:59,120
Speaker 1: the fix if you look at the fixed with a

162
00:08:59,120 --> 00:09:02,080
Speaker 1: twelve handles complacency in the market. When you see those

163
00:09:02,120 --> 00:09:06,480
Speaker 1: two um indicators at the press levels that they're at there,

164
00:09:06,720 --> 00:09:09,640
Speaker 1: it's almost a near certainty that something is going to

165
00:09:09,679 --> 00:09:12,439
Speaker 1: disrupt that calmness in the market. And I think that

166
00:09:12,440 --> 00:09:15,520
Speaker 1: that's likely to happen somewhere Q one, Q two. Now,

167
00:09:15,640 --> 00:09:17,800
Speaker 1: I'm still constructive on the year, but I do think

168
00:09:17,800 --> 00:09:20,280
Speaker 1: we're going to start seeing some volatility. It's just we

169
00:09:20,400 --> 00:09:23,240
Speaker 1: just had too long a period without it. So is

170
00:09:23,559 --> 00:09:25,839
Speaker 1: how much of your you know, six to eight, six

171
00:09:25,880 --> 00:09:30,040
Speaker 1: to nine percent kind of return scenario predicated upon a

172
00:09:30,240 --> 00:09:35,920
Speaker 1: very benign FED? Big part that great, Yes, that's a

173
00:09:36,000 --> 00:09:38,079
Speaker 1: huge part of this, because you know we're heading into

174
00:09:38,120 --> 00:09:40,560
Speaker 1: an election year and we all know that the FED

175
00:09:40,679 --> 00:09:45,600
Speaker 1: historically in an election year tends not to be active

176
00:09:45,600 --> 00:09:47,640
Speaker 1: in the market in terms of shifting policy. Now, the

177
00:09:47,720 --> 00:09:49,600
Speaker 1: FED has already told me I was suggesting maybe we

178
00:09:49,600 --> 00:09:52,360
Speaker 1: could have a rate increase at the data Lisa quote

179
00:09:52,400 --> 00:09:57,600
Speaker 1: unquote rejected that. If she's right, She's absolutely right. Now

180
00:09:57,640 --> 00:09:59,600
Speaker 1: we're going to continue to see the FED ad liquidity

181
00:10:00,480 --> 00:10:03,800
Speaker 1: because you know, we have the Repoke conversation. But that said,

182
00:10:03,840 --> 00:10:05,160
Speaker 1: I don't think we're going to see much in the

183
00:10:05,160 --> 00:10:07,600
Speaker 1: way for its side. Yet you reject that as well. Yes,

184
00:10:07,760 --> 00:10:09,560
Speaker 1: I mean, it just seems implausible to me. They are

185
00:10:09,600 --> 00:10:11,959
Speaker 1: so shell shocked by what happened last year in December

186
00:10:12,000 --> 00:10:14,640
Speaker 1: that there's no way they're going to do that. Rightly. Okay,

187
00:10:14,640 --> 00:10:16,679
Speaker 1: So the question is we're gonna actually see inflation pick up.

188
00:10:17,280 --> 00:10:20,840
Speaker 1: I think we may see a degree of inflation. And

189
00:10:20,880 --> 00:10:23,439
Speaker 1: the reason why I say only a degree in spite

190
00:10:23,440 --> 00:10:25,800
Speaker 1: of what we saw today in the data, is because

191
00:10:26,000 --> 00:10:29,960
Speaker 1: the global economy is not going to allow inflation to

192
00:10:30,080 --> 00:10:33,439
Speaker 1: really rise above where we're seeing it right now. But then,

193
00:10:33,679 --> 00:10:36,760
Speaker 1: how much inflation do we need to see before it

194
00:10:36,800 --> 00:10:39,600
Speaker 1: disrupts the sort of complacency that we see around no

195
00:10:39,720 --> 00:10:42,160
Speaker 1: inflation and that that's being priced into. I don't think

196
00:10:42,200 --> 00:10:44,839
Speaker 1: that inflation is going to be the driver of what

197
00:10:44,960 --> 00:10:48,360
Speaker 1: upsets the complacent. I don't I just don't see it.

198
00:10:48,720 --> 00:10:54,320
Speaker 1: You know, we're seeing great, great employment numbers, great confidence,

199
00:10:54,360 --> 00:10:57,000
Speaker 1: and great income gains, and we're seeing that in really

200
00:10:57,000 --> 00:11:00,720
Speaker 1: healthy spending, but we're not seeing it through to the

201
00:11:00,760 --> 00:11:04,040
Speaker 1: economy in terms of making things more expensive, with the

202
00:11:04,040 --> 00:11:06,360
Speaker 1: exception of some real estate some pockets, of course, but

203
00:11:06,400 --> 00:11:08,160
Speaker 1: that's been a thing that we've been dealing with for now,

204
00:11:08,200 --> 00:11:11,000
Speaker 1: for three or four or five years. We've seen in

205
00:11:11,040 --> 00:11:15,360
Speaker 1: twenty nineteen in this grind up in the market. You know,

206
00:11:15,559 --> 00:11:17,800
Speaker 1: periods during the year would be people were saying I

207
00:11:17,840 --> 00:11:20,000
Speaker 1: gotta go defensive, and then we'd see people going back

208
00:11:20,000 --> 00:11:22,839
Speaker 1: into more cyclicals or maybe even the growth stocks. How

209
00:11:22,880 --> 00:11:25,720
Speaker 1: do you how do you think the will be in

210
00:11:25,800 --> 00:11:27,600
Speaker 1: terms of do I take a little bit more risk

211
00:11:27,640 --> 00:11:30,040
Speaker 1: with microL folio or I get a little bit more defensive. Well,

212
00:11:30,080 --> 00:11:31,559
Speaker 1: I think that people who have been around for any

213
00:11:31,600 --> 00:11:34,040
Speaker 1: period of time at all are And I was with

214
00:11:34,240 --> 00:11:39,560
Speaker 1: a couple of pretty significant individuals last night. In terms

215
00:11:39,600 --> 00:11:42,959
Speaker 1: of the markets, the sense is that listen, if I'm

216
00:11:42,960 --> 00:11:45,960
Speaker 1: putting the money money to work in the market right now,

217
00:11:46,600 --> 00:11:49,640
Speaker 1: I'm nervous. I'm nervous. Why because of the run up

218
00:11:49,679 --> 00:11:52,960
Speaker 1: we've seen, you know, So, I think if people are

219
00:11:53,400 --> 00:11:56,959
Speaker 1: looking at their overall portfolio, they're going to look at

220
00:11:57,200 --> 00:12:01,840
Speaker 1: a more defensive posture that's going to be fueled by policy,

221
00:12:01,840 --> 00:12:04,320
Speaker 1: in other words, a degree of certainty that the markets

222
00:12:04,360 --> 00:12:08,559
Speaker 1: might not otherwise provide. And I'm speaking specifically of infrastructure. Okay,

223
00:12:08,600 --> 00:12:11,600
Speaker 1: what do you think will be the worst performing asset class?

224
00:12:11,640 --> 00:12:17,199
Speaker 1: Of what's the big loser? I think it's going to

225
00:12:17,240 --> 00:12:21,719
Speaker 1: be utilities. Interesting, I think it's going to be utilities.

226
00:12:22,240 --> 00:12:25,920
Speaker 1: And the primary reason I say that is because UM

227
00:12:25,960 --> 00:12:29,959
Speaker 1: with utilities pricing is largely baked in. There's very little

228
00:12:30,040 --> 00:12:33,360
Speaker 1: alpha out there that you can harvest that is going

229
00:12:33,400 --> 00:12:36,600
Speaker 1: to be priced into a market where there's going to

230
00:12:36,640 --> 00:12:39,000
Speaker 1: be a lot of liquidity and there's going to be

231
00:12:39,080 --> 00:12:41,319
Speaker 1: a lot of money slashing around on the market. It's

232
00:12:41,360 --> 00:12:43,760
Speaker 1: not going to be looking for dividends, right Well, so

233
00:12:43,840 --> 00:12:45,600
Speaker 1: on the flip side, what's going to be the absolute

234
00:12:45,640 --> 00:12:50,280
Speaker 1: best performing asset class? I love infrastructure, for UM, love

235
00:12:50,320 --> 00:12:55,560
Speaker 1: heavy construction. UH continue to be very, very engaged in

236
00:12:55,760 --> 00:12:59,120
Speaker 1: real estate space. I think in spite of the fact

237
00:12:59,120 --> 00:13:01,840
Speaker 1: that we're seeing pockets I think it's you're seeing pockets

238
00:13:01,840 --> 00:13:06,840
Speaker 1: of over I would suggest inflation in some real estate markets,

239
00:13:07,040 --> 00:13:10,120
Speaker 1: but I think that's also fueling a wider growth in

240
00:13:10,200 --> 00:13:14,200
Speaker 1: real estate demand and exposure in terms of investment. So

241
00:13:14,360 --> 00:13:17,840
Speaker 1: secondary and third tertiary markets are seeing real benefit. Now,

242
00:13:18,160 --> 00:13:19,640
Speaker 1: do you think we're actually gonna get a trade deal

243
00:13:19,640 --> 00:13:21,839
Speaker 1: that's actually on paper that somebody can see. Are we're

244
00:13:21,840 --> 00:13:23,960
Speaker 1: just gonna get tweets? We're going to get a trade

245
00:13:23,960 --> 00:13:29,719
Speaker 1: deal and is going to be a significant tailwind to

246
00:13:29,880 --> 00:13:35,840
Speaker 1: the global narrative. And that's that's the that's that's the thing.

247
00:13:36,040 --> 00:13:39,760
Speaker 1: It's it's really how the globe looks at what the

248
00:13:39,800 --> 00:13:43,360
Speaker 1: opportunity is in trade again. Yeah, narrative is the key operative.

249
00:13:43,400 --> 00:13:45,040
Speaker 1: It's not clear what that will do, but the narrative

250
00:13:45,040 --> 00:13:47,439
Speaker 1: matters because it matters for business confidence. We saw it

251
00:13:47,440 --> 00:13:49,360
Speaker 1: in the fourth quarter last year. It really narrator mat

252
00:13:49,559 --> 00:13:53,400
Speaker 1: On the flip side, yea, all narrative terrible than narrative wonderful.

253
00:13:53,920 --> 00:13:56,960
Speaker 1: Now we're narrative pretty good. Peter Kenny, thank you so

254
00:13:57,040 --> 00:13:59,400
Speaker 1: much for being with us. Peter Getty, founder and Strategic

255
00:13:59,400 --> 00:14:04,040
Speaker 1: Boards illusion Um, founder of Strategic Board Solutions, joining us

256
00:14:04,040 --> 00:14:22,880
Speaker 1: here in our interactive broker studios. Well, have you ever

257
00:14:22,880 --> 00:14:25,560
Speaker 1: stepped back and thought, where does all the world's garbage

258
00:14:25,600 --> 00:14:28,600
Speaker 1: got a lot? I never did until I saw a

259
00:14:28,680 --> 00:14:31,520
Speaker 1: recent Wall Street Journal article talking about it and they

260
00:14:31,520 --> 00:14:33,840
Speaker 1: said most of it has been going to China historically.

261
00:14:33,840 --> 00:14:36,440
Speaker 1: But now I was China saying, gee, maybe not anymore.

262
00:14:36,720 --> 00:14:39,600
Speaker 1: Julia Atwood, head of Advanced Materials for Bloomberg any f

263
00:14:40,000 --> 00:14:41,920
Speaker 1: joins us to chat about this. She's in our Paris

264
00:14:42,000 --> 00:14:44,920
Speaker 1: office today, Lucky for Julia. So Julia, this was an

265
00:14:44,960 --> 00:14:48,520
Speaker 1: interesting story. Again, A lot of trash historically has gone

266
00:14:48,560 --> 00:14:51,800
Speaker 1: to China for processing. Then I get starting last year

267
00:14:51,840 --> 00:14:54,840
Speaker 1: they said, we're not really interested in your trash what's

268
00:14:54,840 --> 00:14:58,240
Speaker 1: the story here, Hi guys, thanks for having me. Yeah,

269
00:14:58,400 --> 00:15:02,080
Speaker 1: the story is really interesting ing, especially because China is

270
00:15:02,160 --> 00:15:04,520
Speaker 1: kind of half of it, and then the circular economy

271
00:15:04,560 --> 00:15:07,800
Speaker 1: is the other half of it. So what China said was,

272
00:15:08,600 --> 00:15:11,440
Speaker 1: we don't want your trash anymore because it's too dirty,

273
00:15:11,560 --> 00:15:14,080
Speaker 1: it's too poorly sorted, and we think of it as

274
00:15:14,200 --> 00:15:17,920
Speaker 1: toxic waste. So they have basically said, we are moving

275
00:15:17,920 --> 00:15:21,280
Speaker 1: towards advanced manufacturing. We want to make the really difficult stuff.

276
00:15:21,320 --> 00:15:24,760
Speaker 1: We don't need any more waste plastic to use to

277
00:15:24,880 --> 00:15:28,560
Speaker 1: make toys or simpler products. So they called it their

278
00:15:28,680 --> 00:15:32,640
Speaker 1: National Sword Policy, and it was really about how they're

279
00:15:32,720 --> 00:15:35,640
Speaker 1: changing their manufacturing focus and the quality of what they

280
00:15:35,640 --> 00:15:38,440
Speaker 1: were getting from other countries. Julia, I think about this

281
00:15:38,520 --> 00:15:41,040
Speaker 1: all the time, in part because I'm trying to understand.

282
00:15:41,320 --> 00:15:45,240
Speaker 1: Let's say you get take out Chinese food and you're

283
00:15:45,240 --> 00:15:48,400
Speaker 1: going to recycle the plastic containers. How much do you

284
00:15:48,440 --> 00:15:52,240
Speaker 1: have to wash them in order to have them properly recycled.

285
00:15:52,240 --> 00:15:54,360
Speaker 1: I know this is crazy to to be talking about this,

286
00:15:54,400 --> 00:15:56,680
Speaker 1: but it's actually it goes to the fundamental heart of

287
00:15:56,720 --> 00:16:00,680
Speaker 1: this right m M. It does absolutely, because it's a

288
00:16:00,680 --> 00:16:04,080
Speaker 1: totally different story if you've got something that's really clean

289
00:16:04,200 --> 00:16:07,040
Speaker 1: and really well sorted, because then recyclers can get a

290
00:16:07,080 --> 00:16:10,040
Speaker 1: high value product out of it at the end. Um

291
00:16:10,160 --> 00:16:12,360
Speaker 1: So the recyclers would tell you, my god, put it

292
00:16:12,400 --> 00:16:16,120
Speaker 1: in the dishwasher, have it clean, sterilized, and put it

293
00:16:16,160 --> 00:16:19,600
Speaker 1: into a completely separate bin. So they want something perfect.

294
00:16:19,920 --> 00:16:23,000
Speaker 1: Why they want something perfect? Why can't we come up

295
00:16:23,040 --> 00:16:25,960
Speaker 1: with technology that just does that? I mean, because that's

296
00:16:26,040 --> 00:16:30,680
Speaker 1: if that's the huge obstacle between reusing and not reusing. Uh,

297
00:16:30,720 --> 00:16:33,480
Speaker 1: you know, it's going to take a whole lot of education, luck,

298
00:16:33,640 --> 00:16:36,400
Speaker 1: and probably failure to get this right. Why can't we

299
00:16:36,400 --> 00:16:39,880
Speaker 1: just come up with better technology? Well, we have because

300
00:16:39,920 --> 00:16:42,080
Speaker 1: I think a lot of people have realized that trying

301
00:16:42,080 --> 00:16:45,920
Speaker 1: to convince a mass of consumers is difficult, and you

302
00:16:45,960 --> 00:16:48,720
Speaker 1: want to be thinking about asking companies to do something

303
00:16:48,720 --> 00:16:50,800
Speaker 1: because they're kind of a point source for all of

304
00:16:50,840 --> 00:16:54,440
Speaker 1: these products. So there are better technologies on the sorting side,

305
00:16:54,480 --> 00:16:59,160
Speaker 1: whether you're using robotics or computer vision to pick out

306
00:16:59,200 --> 00:17:02,320
Speaker 1: the right plastic. But what's also really interesting is that

307
00:17:02,360 --> 00:17:05,719
Speaker 1: the packaging makers themselves are going back and looking at

308
00:17:05,720 --> 00:17:08,240
Speaker 1: the re design of saying what can I do to

309
00:17:08,359 --> 00:17:11,560
Speaker 1: be better. And then there are some companies who are

310
00:17:11,600 --> 00:17:15,280
Speaker 1: just sidestepping the whole thing completely, looking into new processes

311
00:17:15,320 --> 00:17:19,560
Speaker 1: like chemical recycling that can deal with a few more contaminants.

312
00:17:19,880 --> 00:17:22,080
Speaker 1: There are a bunch of ways that we can sidestep

313
00:17:22,119 --> 00:17:25,159
Speaker 1: these problems through better technology. Can you give us a

314
00:17:25,200 --> 00:17:28,080
Speaker 1: sense of how, I don't know if how the world

315
00:17:28,160 --> 00:17:30,199
Speaker 1: has done in terms of recycling, or maybe how the

316
00:17:30,240 --> 00:17:32,600
Speaker 1: western developed world has done. I mean, over the last

317
00:17:32,600 --> 00:17:36,840
Speaker 1: ten or twenty years, is the world recycling materially more

318
00:17:36,880 --> 00:17:41,639
Speaker 1: than it used to? Not? Really, it depends on which

319
00:17:41,680 --> 00:17:44,399
Speaker 1: country you pick. The really stand out example of the

320
00:17:44,440 --> 00:17:47,000
Speaker 1: people who have done very well with their recycling is

321
00:17:47,040 --> 00:17:50,600
Speaker 1: actually South Korea. And the reason why they did so

322
00:17:50,600 --> 00:17:53,120
Speaker 1: well is because they introduced something called the pay as

323
00:17:53,160 --> 00:17:56,199
Speaker 1: you throw scheme that they actually got charged by the

324
00:17:56,240 --> 00:17:59,760
Speaker 1: amount of waste per household they were generating, rather than

325
00:18:00,160 --> 00:18:02,560
Speaker 1: having a flat fee buried somewhere in your taxes that

326
00:18:02,600 --> 00:18:05,560
Speaker 1: you can't see now in Europe. In the US, we've

327
00:18:05,600 --> 00:18:08,879
Speaker 1: actually seen some recycling rates starting to go down because

328
00:18:08,880 --> 00:18:12,760
Speaker 1: it's just getting too expensive for municipalities to do. So

329
00:18:12,880 --> 00:18:16,320
Speaker 1: what's the US going to do with China now rejecting

330
00:18:16,880 --> 00:18:21,520
Speaker 1: our recycling well, what I think is the most interesting

331
00:18:21,760 --> 00:18:24,240
Speaker 1: part of this whole question is how other parts of

332
00:18:24,280 --> 00:18:27,399
Speaker 1: the supply chain have started to get involved. So China

333
00:18:27,480 --> 00:18:29,880
Speaker 1: saying we're not going to take plastic waste made all

334
00:18:29,880 --> 00:18:33,160
Speaker 1: the waste managers sit up and take notice. But what's

335
00:18:33,200 --> 00:18:35,359
Speaker 1: happening at the other end of the supply chain is

336
00:18:35,400 --> 00:18:38,840
Speaker 1: consumer companies are coming under pressure to be more sustainable

337
00:18:38,840 --> 00:18:41,600
Speaker 1: and recycle more because of all the terrible images of

338
00:18:41,680 --> 00:18:44,680
Speaker 1: plastic waste in the ocean. So what started to happen,

339
00:18:44,800 --> 00:18:47,920
Speaker 1: especially in the US, is these brand owners have said,

340
00:18:49,160 --> 00:18:51,760
Speaker 1: we can't be held responsible for this, we have to

341
00:18:51,800 --> 00:18:55,560
Speaker 1: start making investments. So we recently saw an Espresso give

342
00:18:55,600 --> 00:18:58,680
Speaker 1: over a million dollars to a recycling company to install

343
00:18:58,760 --> 00:19:01,840
Speaker 1: a new line to cycle those little aluminum pods for

344
00:19:01,880 --> 00:19:04,960
Speaker 1: your coffee. So the waves managers are kind of sitting

345
00:19:05,000 --> 00:19:08,760
Speaker 1: around saying, Okay, when do I get my million dollars? Like,

346
00:19:08,960 --> 00:19:11,360
Speaker 1: when is the brand coming to the rescue to help

347
00:19:11,440 --> 00:19:15,920
Speaker 1: us fix our recycling infrastructure. Coca Cola, Pepsi, Corred Doctor

348
00:19:16,000 --> 00:19:19,120
Speaker 1: Pepper together they're putting a hundred million dollars into better

349
00:19:19,119 --> 00:19:22,639
Speaker 1: curbside recycling. So really it's the companies that are leaving

350
00:19:22,840 --> 00:19:25,720
Speaker 1: leading it, not the policy makers. All right, just a

351
00:19:25,760 --> 00:19:29,560
Speaker 1: quick question. If the garbage isn't going to China, where

352
00:19:29,640 --> 00:19:32,560
Speaker 1: is it going. A lot of it is actually being

353
00:19:32,560 --> 00:19:36,960
Speaker 1: stored in Japan. They just have massive storage facilities that

354
00:19:37,000 --> 00:19:39,680
Speaker 1: are holding onto the waist and hoping prices are going

355
00:19:39,720 --> 00:19:43,440
Speaker 1: to increase because most scrap is actually traded and there's

356
00:19:43,480 --> 00:19:44,800
Speaker 1: a little bit of light at the end of the

357
00:19:44,840 --> 00:19:48,120
Speaker 1: tunnel because we're starting to see prices for the kind

358
00:19:48,160 --> 00:19:51,359
Speaker 1: of plastics that go into detergent bottles actually being higher

359
00:19:51,359 --> 00:19:54,240
Speaker 1: than new material. So the markets are going to rebound.

360
00:19:54,960 --> 00:19:58,680
Speaker 1: Julia Atwood, thank you so much. Really interesting. Julia Atwood,

361
00:19:58,680 --> 00:20:02,400
Speaker 1: head of Advanced Materials for Bloomberg, the benef Bloomberg New

362
00:20:02,520 --> 00:20:05,040
Speaker 1: Energy Finance. She is normally based in New York, but

363
00:20:05,080 --> 00:20:07,680
Speaker 1: in Paris today. And I gotta say I think about

364
00:20:07,680 --> 00:20:10,200
Speaker 1: it all the time. You started by asking how often

365
00:20:10,200 --> 00:20:11,720
Speaker 1: do you think about it? And I think about it

366
00:20:11,760 --> 00:20:13,600
Speaker 1: all the time because I think about how much to

367
00:20:13,880 --> 00:20:18,000
Speaker 1: clean each item, and then if you end up washing

368
00:20:18,000 --> 00:20:20,960
Speaker 1: it with a lot of water, is that ineffective or effective?

369
00:20:21,040 --> 00:20:23,040
Speaker 1: I mean, I know I sound really tortured when I

370
00:20:23,080 --> 00:20:24,480
Speaker 1: when I go into this, but I think about it.

371
00:20:24,600 --> 00:20:28,120
Speaker 1: Every time there's some plastic container, it's like, well, how

372
00:20:28,200 --> 00:20:31,800
Speaker 1: much effort should you put into making it spotless? It's interesting,

373
00:20:31,840 --> 00:20:34,000
Speaker 1: you know here at Bloomberg and all the Bloomberg offices

374
00:20:34,040 --> 00:20:37,720
Speaker 1: around the world really really focused on recycling and really

375
00:20:37,720 --> 00:20:40,040
Speaker 1: take the time to have all the separate bins and

376
00:20:40,320 --> 00:20:43,800
Speaker 1: separated and we have all the compostable things. I just

377
00:20:43,880 --> 00:20:47,479
Speaker 1: wonder what other companies and what are the households, to

378
00:20:47,520 --> 00:20:49,480
Speaker 1: what degree are they taking it? I just don't know. Well,

379
00:20:49,480 --> 00:20:51,320
Speaker 1: and at what point do you just bring your own dish?

380
00:20:51,480 --> 00:20:53,320
Speaker 1: I mean, I'm serious, Like, at what point do we

381
00:20:53,400 --> 00:20:57,600
Speaker 1: just stop with the disposable stuff? I don't know. Interesting questions.

382
00:21:12,400 --> 00:21:15,480
Speaker 1: Holiday shopping starting to wrap up here. We have Christmas

383
00:21:15,520 --> 00:21:18,479
Speaker 1: in a few days Hanakah starting on Sunday. Let's get

384
00:21:18,480 --> 00:21:21,560
Speaker 1: a sense of how things are out there in retail land.

385
00:21:21,560 --> 00:21:23,840
Speaker 1: We welcome my good friend Jim Fallon, editorial director for

386
00:21:23,880 --> 00:21:26,080
Speaker 1: Woman's where Daily joins us here in our Bloomberg Inner

387
00:21:26,240 --> 00:21:29,200
Speaker 1: Active Broker studio, braving the cold of New York City.

388
00:21:29,520 --> 00:21:31,520
Speaker 1: So Jim, give us a sense here where you know,

389
00:21:31,600 --> 00:21:35,840
Speaker 1: we kind of came into the holiday shopping season cautiously optimistic.

390
00:21:36,080 --> 00:21:38,240
Speaker 1: I heard numbers of you know, kind of fourish percent

391
00:21:38,359 --> 00:21:41,359
Speaker 1: growth in terms of retail sales around the holidays. What

392
00:21:41,400 --> 00:21:45,880
Speaker 1: are you finding? Basically, those those forecasts ended up being accurate.

393
00:21:45,960 --> 00:21:48,240
Speaker 1: It looks like it's going to be about four percent growth,

394
00:21:48,280 --> 00:21:52,040
Speaker 1: maybe even a little higher. We were cautiously optimistic. I

395
00:21:52,080 --> 00:21:55,000
Speaker 1: think the jobs picture, the overall strength of the economy,

396
00:21:55,320 --> 00:21:59,560
Speaker 1: fed into a consumer optimism that really hasn't waned. But

397
00:21:59,640 --> 00:22:02,439
Speaker 1: I think what's happened is that the shopping happened early,

398
00:22:02,680 --> 00:22:05,280
Speaker 1: then there was a lull, and now you'll see this weekend,

399
00:22:05,440 --> 00:22:08,200
Speaker 1: the store is busy on this Super Saturday, last Saturday

400
00:22:08,200 --> 00:22:11,760
Speaker 1: before Christmas. When we came into this holiday shopping season,

401
00:22:11,800 --> 00:22:13,280
Speaker 1: one of the things I heard was, Oh, it's going

402
00:22:13,359 --> 00:22:17,400
Speaker 1: to be a short, compressed holiday shopping season. Thanksgiving came late,

403
00:22:17,440 --> 00:22:19,080
Speaker 1: and so on and so forth. Is that gonna be

404
00:22:19,080 --> 00:22:21,400
Speaker 1: a big issue? Do you think when the total dollars accounted,

405
00:22:22,040 --> 00:22:24,240
Speaker 1: I think the dollars will be the amount that was

406
00:22:24,240 --> 00:22:26,480
Speaker 1: going to be spent. So I think it is. I

407
00:22:26,480 --> 00:22:29,119
Speaker 1: mean for the retailers, it's an issue for the retailers

408
00:22:29,200 --> 00:22:31,280
Speaker 1: less the consumer. The consumer is going to shop how

409
00:22:31,359 --> 00:22:34,000
Speaker 1: much they have six days less, but they're not really

410
00:22:34,000 --> 00:22:36,879
Speaker 1: conscious of it. It's a tighter pipeline for the for

411
00:22:36,920 --> 00:22:39,560
Speaker 1: the retailers to get their markdowns in and so forth,

412
00:22:39,760 --> 00:22:42,920
Speaker 1: but the overall dollar number won't be reduced because there's

413
00:22:42,960 --> 00:22:45,119
Speaker 1: six shop fewer shopping days. Yeah, that's one of the

414
00:22:45,160 --> 00:22:46,760
Speaker 1: things that I've learned as I spent more and more

415
00:22:46,760 --> 00:22:49,159
Speaker 1: time looking at retail It's not just getting people in

416
00:22:49,200 --> 00:22:51,040
Speaker 1: the door to buy stuff, for getting them to click

417
00:22:51,280 --> 00:22:53,359
Speaker 1: the buy stuff, it's what kind of promotions you had

418
00:22:53,400 --> 00:22:56,399
Speaker 1: to offer to get that traffic, whether it's foot traffic

419
00:22:56,600 --> 00:22:59,880
Speaker 1: or e traffic. Any sense that promotions which are neg

420
00:23:00,080 --> 00:23:02,720
Speaker 1: if for retailer's margins are running any higher than lower

421
00:23:02,720 --> 00:23:05,320
Speaker 1: the normal margin. Promotions are a little higher this year.

422
00:23:05,359 --> 00:23:10,399
Speaker 1: They were earlier. Again, retailers started promoting even before Thanksgiving

423
00:23:10,440 --> 00:23:13,639
Speaker 1: and Black Friday. So what's happening is that the Christmas

424
00:23:13,640 --> 00:23:16,879
Speaker 1: shopping period is getting extended into early November even for

425
00:23:16,920 --> 00:23:20,600
Speaker 1: some retailers, and mark promotions are a little higher this year,

426
00:23:20,640 --> 00:23:24,160
Speaker 1: so margins will probably be impacted. Plus you have things

427
00:23:24,200 --> 00:23:26,280
Speaker 1: like free shipping that have to go into the cost

428
00:23:26,359 --> 00:23:29,520
Speaker 1: of it and so forth. So what are people buying

429
00:23:29,600 --> 00:23:31,199
Speaker 1: this year? Is it? Is it just kind of the

430
00:23:31,200 --> 00:23:34,399
Speaker 1: electronic gadgets or is it fashion? What are people buying?

431
00:23:34,880 --> 00:23:37,560
Speaker 1: It's the normal, it's electronic gadgets, it's you know, it's

432
00:23:37,600 --> 00:23:40,679
Speaker 1: the AirPod, It's that kind of thing. Fashion is the normal,

433
00:23:40,720 --> 00:23:43,480
Speaker 1: sweater is cold weather gear, et cetera. There isn't There

434
00:23:43,480 --> 00:23:47,080
Speaker 1: hasn't really been a breakout fashion item that drives consumers

435
00:23:47,160 --> 00:23:49,480
Speaker 1: to the store in quite a few seasons, and that

436
00:23:49,600 --> 00:23:52,680
Speaker 1: again has been an issue for retailers. So it's interesting.

437
00:23:53,480 --> 00:23:55,240
Speaker 1: I'm not sure if this is quite your belly wick,

438
00:23:55,320 --> 00:23:58,840
Speaker 1: but toys UM toys r Us no longer in business

439
00:23:58,960 --> 00:24:01,720
Speaker 1: where the moms and get these toys. Walmart picked up

440
00:24:01,720 --> 00:24:04,359
Speaker 1: a lot of that business. Target has has picked up

441
00:24:04,400 --> 00:24:08,200
Speaker 1: some of it. Um Amazon of course, So I think

442
00:24:08,240 --> 00:24:11,600
Speaker 1: I think those people recognize even as Toys rs was struggling,

443
00:24:11,720 --> 00:24:14,000
Speaker 1: that they needed to rush to fill in the gaps,

444
00:24:14,040 --> 00:24:17,320
Speaker 1: so they all they all expanded their toy offering. So

445
00:24:17,359 --> 00:24:21,440
Speaker 1: we all know that retail sales really over the last

446
00:24:21,480 --> 00:24:25,440
Speaker 1: ten plus years, maybe even more, shifting pretty dramatically from

447
00:24:25,480 --> 00:24:28,680
Speaker 1: the bricks and mortar to e commerce, Amazon and so

448
00:24:28,720 --> 00:24:32,320
Speaker 1: on and so forth. How are the retailers doing trying

449
00:24:32,359 --> 00:24:35,600
Speaker 1: to make that migration from you know, bricks and mortars

450
00:24:35,680 --> 00:24:38,359
Speaker 1: solely to maybe what I've heard as a term omni channel.

451
00:24:38,680 --> 00:24:40,760
Speaker 1: How is that going? Are there winners and losers or

452
00:24:40,800 --> 00:24:45,480
Speaker 1: is everybody kind of struggling? It's there are definitely winners.

453
00:24:45,560 --> 00:24:47,560
Speaker 1: What you're seeing is, you know, the Walmarts and the

454
00:24:47,600 --> 00:24:50,359
Speaker 1: targets of the world are winning in that with the

455
00:24:50,480 --> 00:24:53,760
Speaker 1: buy online, pick up in store so called bopus or

456
00:24:53,840 --> 00:24:56,760
Speaker 1: click and collect um. But if you look at Walmart,

457
00:24:56,760 --> 00:24:59,760
Speaker 1: it's market capitalization has increased by a hundred billion dollars

458
00:24:59,760 --> 00:25:02,679
Speaker 1: to years, so they're beginning to figure that out, and

459
00:25:02,680 --> 00:25:05,800
Speaker 1: they're beginning to use their stores as as many distribution

460
00:25:05,880 --> 00:25:09,400
Speaker 1: centers target the same. So those very much our winners.

461
00:25:09,920 --> 00:25:12,879
Speaker 1: Retailers such as Macy's are still sort of figuring it

462
00:25:12,920 --> 00:25:16,680
Speaker 1: out um to a certain extent, but again they're getting there,

463
00:25:17,520 --> 00:25:19,679
Speaker 1: but it's a challenge, and I think I think the

464
00:25:19,720 --> 00:25:23,000
Speaker 1: omni channel world world almost has to disappear because it's

465
00:25:23,000 --> 00:25:25,320
Speaker 1: just retail now. The consumer wants to buy it where

466
00:25:25,359 --> 00:25:27,040
Speaker 1: they where they want to buy it, and want to

467
00:25:27,040 --> 00:25:28,679
Speaker 1: pick it up or get it however they want to.

468
00:25:28,800 --> 00:25:30,880
Speaker 1: There's always those in my town where I live in Jersey,

469
00:25:30,920 --> 00:25:33,520
Speaker 1: there's always those shop local days. And the signs and

470
00:25:33,560 --> 00:25:35,840
Speaker 1: not shop local, which we we certainly try to do,

471
00:25:35,880 --> 00:25:40,760
Speaker 1: but the reality is they can't really make those investments

472
00:25:40,800 --> 00:25:44,119
Speaker 1: to get us to where we think we ought to be,

473
00:25:44,200 --> 00:25:46,200
Speaker 1: which is I want it now and I want to

474
00:25:46,440 --> 00:25:48,960
Speaker 1: anywhere I want to get. So what is small? And

475
00:25:49,000 --> 00:25:51,720
Speaker 1: that's kind of where the you know, the real retail

476
00:25:51,800 --> 00:25:53,400
Speaker 1: is it down at the you know, the local level.

477
00:25:53,400 --> 00:25:55,199
Speaker 1: What are the local retailers trying to do here? I

478
00:25:55,200 --> 00:25:59,679
Speaker 1: think the local retailers play up the personalization attitude. We

479
00:25:59,800 --> 00:26:02,360
Speaker 1: know our customer, we know what you want. Oh, come

480
00:26:02,400 --> 00:26:05,240
Speaker 1: in and buy. I got this specifically for you, this

481
00:26:05,320 --> 00:26:10,199
Speaker 1: is your size, ETCETERA product differentiation to a big extent

482
00:26:10,840 --> 00:26:14,840
Speaker 1: um and service. I mean, I think that even if

483
00:26:14,880 --> 00:26:17,480
Speaker 1: it's if it's a Walmart or it's a major retailer,

484
00:26:17,520 --> 00:26:19,720
Speaker 1: you're not going to get that personal service. You're walking

485
00:26:19,720 --> 00:26:21,440
Speaker 1: into the store and they say, how are you? How

486
00:26:21,480 --> 00:26:24,760
Speaker 1: your children house? Whatever? That's the edge they can play.

487
00:26:25,080 --> 00:26:27,800
Speaker 1: I can tell you Tom Keen is heartbroken that Barneys

488
00:26:28,200 --> 00:26:31,159
Speaker 1: is going bankrupt. What do you take away from that?

489
00:26:31,280 --> 00:26:34,560
Speaker 1: I mean that was a great brand, high end. What

490
00:26:34,680 --> 00:26:38,800
Speaker 1: happened there, It was high end to a certain extent.

491
00:26:38,880 --> 00:26:42,040
Speaker 1: Online killed it. I mean a lot of those products

492
00:26:42,119 --> 00:26:46,359
Speaker 1: became available through the Netta portes, the matches, fashion, et cetera.

493
00:26:46,480 --> 00:26:48,600
Speaker 1: You could you could literally sit I mean, Barney's had

494
00:26:48,600 --> 00:26:53,480
Speaker 1: its own website. The move uptown to Madison Avenue, even

495
00:26:53,480 --> 00:26:56,680
Speaker 1: in the nineties was probably a misjudgment of the business,

496
00:26:57,119 --> 00:26:59,480
Speaker 1: given the rents that they had to pay and so forth.

497
00:26:59,680 --> 00:27:02,439
Speaker 1: Then issue killed it and it was just keeping up

498
00:27:02,440 --> 00:27:06,240
Speaker 1: with your customer. I think that the product became widely available,

499
00:27:06,280 --> 00:27:09,480
Speaker 1: and they also became so high end that they didn't

500
00:27:09,480 --> 00:27:11,960
Speaker 1: have a sort of lower tier that would drive a

501
00:27:12,000 --> 00:27:14,200
Speaker 1: lot of foot traffic through the store. What is your

502
00:27:14,200 --> 00:27:17,639
Speaker 1: sense of just the department store concept. Is that completely

503
00:27:18,680 --> 00:27:20,760
Speaker 1: dying or is there a place for I'm looking to

504
00:27:20,800 --> 00:27:24,360
Speaker 1: Cross Street, Bloomingdale's, Macy's, what's the future. I mean, they've

505
00:27:24,359 --> 00:27:27,040
Speaker 1: been predicting the death of the department store since the seventies,

506
00:27:27,080 --> 00:27:29,920
Speaker 1: so you know, clearly it depends on the department store.

507
00:27:30,359 --> 00:27:34,400
Speaker 1: I think there's still a place for them. American department

508
00:27:34,440 --> 00:27:36,840
Speaker 1: stores are in the middle of reinventing themselves. But if

509
00:27:36,840 --> 00:27:39,119
Speaker 1: you go to a lot of the European department stores

510
00:27:39,200 --> 00:27:41,800
Speaker 1: or even Asian department stores, they're packed. If you go

511
00:27:41,840 --> 00:27:44,360
Speaker 1: to a Salvages in London. That store is packed, it's

512
00:27:44,400 --> 00:27:48,400
Speaker 1: offering very exclusive product, it's offering, you know, everything from

513
00:27:48,400 --> 00:27:50,920
Speaker 1: a bakery to a t store to a flower shop,

514
00:27:50,960 --> 00:27:54,680
Speaker 1: et cetera. The more those stores expand into those kinds

515
00:27:54,720 --> 00:27:58,719
Speaker 1: of things, and again, horrible word, but the experiential type retail,

516
00:27:59,119 --> 00:28:01,160
Speaker 1: there is very much still a place for them. Still

517
00:28:01,200 --> 00:28:04,720
Speaker 1: over We still overstored in this country though we had that,

518
00:28:04,880 --> 00:28:07,439
Speaker 1: I mean, I've heard by as much as yes, I mean,

519
00:28:07,520 --> 00:28:10,040
Speaker 1: I mean again back into the eighties, we've been overstored

520
00:28:10,080 --> 00:28:12,159
Speaker 1: compared to other places. All right, Tim Fallon, thanks so

521
00:28:12,240 --> 00:28:14,920
Speaker 1: much for joining us. Jim Fallon's editorial director for Women's

522
00:28:14,920 --> 00:28:17,520
Speaker 1: Wear Daily, joining us here in a Bloomberg Interactive broker studio.

523
00:28:17,920 --> 00:28:20,160
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.

524
00:28:20,320 --> 00:28:22,920
Speaker 1: You can subscribe and listen to interviews at Apple Podcasts

525
00:28:23,000 --> 00:28:26,000
Speaker 1: or whatever podcast platform you prefer. I'm Paul Sweeney. I'm

526
00:28:26,000 --> 00:28:28,719
Speaker 1: on Twitter at pt Sweeney. I'm Lisa abram Woyit's I'm

527
00:28:28,720 --> 00:28:31,600
Speaker 1: on Twitter at Lisa A. Bram Woit's one before the podcast.

528
00:28:31,640 --> 00:28:34,240
Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio